Google Looks to Profit From Alternative Lending

Google realizes that as traditional capital remains hard to come by for some companies, lenders such as On Deck and Lending Club are to be reckoned with.

Google also could see an opportunity to help its own small merchants with a product aimed at financing AdWords purchases as well as looking to develop new credit offerings for Google Wallet customers through Lending Club, he says.

Still, if Google wanted to bet on alternative lending winners, these two companies have both been linked to potential IPOs.

Lending Club has publicly stated it is working toward an initial public offering in 2014.

"We reached profitability in Q1 2013, and right now we're focused on scaling the company, Lending Club CEO Renaud Laplanche said in a statement. "We expect that we'll be ready for an IPO sometime in 2014, but the actual timing will depend on market conditions,"

Lending Club has issued more than $1.65 billion in loans since 2007, including more than $350 million in the last quarter through peer-to-peer lending, which facilitates personal loans to borrowers of up to $35,000 in three- or five-year terms from qualified retail and institutional investors.

Small businesses have been increasingly using alternative forms of lending such as peer-to-peer lending when more traditional financing has been tough to get. The company also plans to expand into small-business lending later this year.

On Deck CEO Noah Breslow said in an interview in February that while there wasn't pressure to go public this year, it could be an option in the next two to three years.

The fast-growing small-business lender has funded more than $450 million in loans to Main Street businesses through its technology-led loan platform.

Yet, given that Google Ventures is involved now, combined with the fact that On Deck keeps adding more investors to its list, and lending by the firm continues to rise -- even as traditional lenders dip their toe into small-business lending again -- it's feasible that time frame could be stepped up.

Breslow wasn't available for comment.

"On Deck has found an efficient way to connect millions of small businesses around the country with the working capital they need to grow their companies," Karim Faris, general partner at Google Ventures, said in a statement. "We invested in On Deck because we believe in the team's game-changing vision, strong talent and disruptive technology.